Shaike Orbach became the CEO of Silicom Ltd (NASDAQ:SILC) in 2001. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Shaike Orbach’s Compensation Compare With Similar Sized Companies?
According to our data, Silicom Ltd has a market capitalization of US$280m, and pays its CEO total annual compensation worth US$1.3m. (This number is for the twelve months until 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$365k. We looked at a group of companies with market capitalizations from US$100m to US$400m, and the median CEO compensation was US$927k.
It would therefore appear that Silicom Ltd pays Shaike Orbach more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see a visual representation of the CEO compensation at Silicom, below.
Is Silicom Ltd Growing?
Over the last three years, Silicom Ltd has not seen its earnings per share change much, though they have improved slightly. In the last year, its revenue is up 8.4%.
I would argue that the improvement in revenue isn’t particularly impressive, but it is good to see modest EPS growth. So there are some positives here, but not enough to earn high praise.
You might want to check this free visual report on analyst forecasts for future earnings.
Has Silicom Ltd Been A Good Investment?
Most shareholders would probably be pleased with Silicom Ltd for providing a total return of 42% over three years. So they may not be at all concerned if the CEO is paid more than is normal for companies around the same size.
We examined the amount Silicom Ltd pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
While we generally prefer to see stronger EPS growth, there’s no arguing with the strong returns to shareholders, over the last three years. As a result of the juicy return to investors, the CEO remuneration may well be quite reasonable. Whatever your view on compensation, you might want to check if insiders are buying or selling Silicom shares (free trial).
Or you might prefer this data-rich interactive visualization of historic revenue and earnings.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.